Presentation on theme: "Unit 6: Credit Section 1: Your Credit Score. I CAN: Define Credit List and describe the 5 Cs of credit Explain how bureaus report credit worthiness Evaluate."— Presentation transcript:
Unit 6: Credit Section 1: Your Credit Score
I CAN: Define Credit List and describe the 5 Cs of credit Explain how bureaus report credit worthiness Evaluate the importance of good credit as it relates to prime rates
Credit Paying interest to borrow money so you can buy what you want NOW! The amount of interest you pay for this money will depend on TRUSTWORTHY you are. Your CREDIT SCORE is the number assigned to you to measure how trustworthy you are. Approximately:
Your credit score = the 5 Cs of Credit Character: borrower's reputation Capacity: measures a borrower's ability to repay a loan by comparing income against recurring debts Capital: lender will consider any capital the borrower puts toward a potential investment, because a large contribution by the borrower will lessen the chance of them not repaying the loan Conditions: the interest rate and amount of principal, will influence the lender's Collateral: property or large assets they could take if you fail to pay
How do you get a credit score? A credit bureau (company that collects data to measure your trustworthiness, like transunion, experian, or equifax) They create a credit report (summary) and it shows your creditworthiness (trustworthiness) to creditors, landlords, etc… If you want a Prime Rate (very low interest rate), you have to show you are trustworthy by having a HIGH credit score A freerider (someone who doesnt pay back loans) would have a very high interest rate because their credit score is too low
How do you get a credit score?
To Improve your score: Pay bills on time. Get current and stay current. Dont open a lot of new accounts too rapidly. Correct mistakes. Shop for loan rates within a focused period of time. Keep balances low on revolving credit. Pay off debt. Check your credit report.
CAN I? Define Credit List and describe the 5 Cs of credit Explain how bureaus report credit worthiness Evaluate the importance of good credit as it relates to prime rates I can prove this by completing activities: 2.1, 2.2, 2.8, and challenge 2-B